View from Brussels: A big battery botch?
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Electric car numbers are increasing but the industries cropping up to support the manufacture of the vehicles may stall if new rules are not introduced. A review of the EU’s CO2 targets for cars is seen as an absolutely crucial fork in the road.
Even the pandemic cannot stop them: electric car sales continue to increase in Europe and beyond. According to Bloomberg NEF, their market share could reach 70 per cent globally by 2040 even if no new policies are put in place.
But carmakers are not on track to build enough EVs in the coming decade to soak up all the battery-making capacity that Europe is set to soon put in place. Clean mobility group T&E warns that so-called battery gigafactories risk going underused.
New analysis by the group calculates that 462 Gigawatt hours (GWh) of battery-producing capacity will be available in the EU and UK by 2025 but only 174GWh worth of demand will be made if the current trend continues.
Billions of euros are being pumped into the industry by investors that want a solid return on their cash. The EU has built much of its next-generation industrial policy around battery production, in an effort to keep step with or even eclipse rivals in south-east Asia.
Those investments and the scores of green jobs that come attached to gigafactories are in jeopardy, T&E warns. Increasing the EU's CO2 targets for cars and vans, as part of a review scheduled to happen in the summer, could avoid the battery botch.
Under the current rules, carmakers have to reduce fleet CO2 emissions by 37.5 per cent by the end of the decade. The law includes incentive super-credits for zero-emission vehicles and penalties for breaches of the CO2 benchmarks.
This summer’s review could see that goal increase to 50 per cent and another update to engine standards under the ‘Euro 7’ rules will also prompt carmakers to build fewer combustion engines in favour of electric motors.
It is difficult to predict at the moment whether it will all add up. Policymakers are still tinkering with another set of rules that set battery standards and which are meant to make the reuse and recycling of batteries more streamlined.
Unlike an electric motor, the EU’s rulebook contains a lot of moving parts and making them all move in-sync is an art form in itself.
With thousands of jobs due to be axed in polluting industries like coal mining, the transport sector’s sustainable shift is going to have to offer alternative sources of employment. If Brussels gets it wrong, the fledgling Green Deal might not make it into adulthood.
There are plenty of promising signs to counter the worst-case scenario. EV numbers are increasing despite the pandemic, big marques like Volkswagen are converting production lines to electric and the current raft of rules appear to be working.
Other stumbling blocks though include the EU possibly including road transport within its carbon-emissions trading scheme, which NGOs like T&E insist will not do as effective a job as CO2 targets or engine standards.
The UK is arguably better placed given that there is a phaseout date of 2030 for all non-hybrid vehicles. A de facto 'combustion engine ban' is unlikely to materialise in EU rule-making, as there are doubts about its legality in the single market and several member states would oppose it.
Whatever happens in the rule-writing room, it seems an indisputable fact now that mass electric car use is approaching. And it is approaching fast.
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